Bitcoin
Liquid Network Exploiter Returns 3,400 Bitcoin Following Multi-Million Dollar Breach
The perpetrator behind the Liquid sidechain exploit returned the majority of the stolen assets while retaining nearly 600 BTC as a purported bounty.
An attacker who extracted roughly 4,000 Bitcoin from the Liquid Network sidechain on September 6 has returned 3,400 BTC, valued at approximately $268 million. The individual retained 598 BTC, worth nearly $47 million, while presenting themselves as a white-hat security researcher.
The incident stemmed from a caching bug in the range-proof verification mechanism within Elements, the software powering Liquid Network. This flaw permitted the generation of L-BTC without the required Bitcoin collateral. The attacker tested the exploit with 2 BTC before creating nearly 4,000 unbacked L-BTC and redeeming them for real Bitcoin through the SideSwap peg-out service, draining the federated reserve from about 4,200 BTC to 197 BTC.
Blockstream halted the sidechain's bridge nodes in response to the attack. Although L-BTC became severely undercollateralized, native assets on the network such as Tether (USDT) and DePix remained untouched on the frozen chain. The software bug has been patched, but Liquid Network remains offline with no confirmed timetable for resuming normal operations.
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